Employers Administration Guide 2008 - Gloucestershire...Please contact either Paula Marshall or...

Pensions Section, Gloucestershire County Council, Shire Hall, Gloucester GL1 2TG

Telephone: (01452) 426677 Fax: (01452) 425862

Email:- [email protected] Web Site: www.gloucestershire.gov.uk/pensions

Employers Administration

Guide 2008

(updated June 2013)

A Guide to Administrative

Procedures for Employers in the Local Government Pension Scheme

Important note if you use Gloucestershire CC Payroll Please contact either Paula Marshall or Pella Fairey in the pension’s office so as we can confirm what the pensions office are currently able to do for you in the way of obtaining certain information direct from the payroll system.

mailto:[email protected]�

Pensions User Guide (2013)

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INDEX

1 Introduction

2 New Starters

3 Changes in Status (i.e. change of name, change in hours, break in service, maternity leave). Includes notes on the calculation of maternity/unpaid leave arrears.

4 Leavers (Pensioners/Early Leavers/Deaths). Includes notes on the completion of the LEAVER1 form.

5 Opting-Out

6 Provisional Benefit Calculations

7 Certificates of Protection

8 Payment of Employees and Employers Pension Contributions

9 Additional Regular Contributions (ARC’s) and Additional Voluntary Contributions (AVC’s)

10 Employers Discretions – statements of policy & other issues on which employer decisions are required

11 Internal Dispute Resolution Procedures

12 Forms


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CONTACTS WITHIN THE PENSIONS SECTION

Given below is the relevant information to confirm which groups of staff within the pension’s office deal with particular enquiries. The current phone contact details for the pension’s staff within each of these groups can be found at the following link: http://www.gloucestershire.gov.uk/extra/article/11521/Whos-Who. Enquiry Please contact : Divorce Queries Complaints

Group Leaders

Retirement Benefit Calculations Death Benefits, Widows & Widowers Benefits

Lead Officers

Starters & Leavers Refunds Deferred Benefits Interfunds AVC's Provisional Calculations Additional Contributions

Pensions Officers

Transfers Pensions Officers (Transfers)

End of year return queries General queries on Scheme/completion of forms Queries regarding communications issued

Lead Officer (Technical Support) & Client & Quality Officer

Pensions Helpline Number : 01452 426677 Pensions Section Fax No : 01452 425862 Pensions Section Email: [email protected] Address: The Pensions Section, Gloucestershire County Council, Shire Hall, Westgate Street, Gloucester, GL1 2TG Employer’s pages of pension’s website: www.gloucestershire.gov.uk/pensionsemployers Employee’s pages of pension website: www.gloucestershire.gov.uk/pensions

http://www.gloucestershire.gov.uk/extra/article/11521/Whos-Who�mailto:[email protected]�http://www.gloucestershire.gov.uk/pensionsemployers�http://www.gloucestershire.gov.uk/pensions�


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The aim of this guide is clarify your role as the Employing Authority under the Regulations and to give guidance on how and when to provide information on the decisions you make both to scheme members and to this office - the Administering Authority. The Local Government Pension Scheme Regulations state that certain decisions must be made by the Employing Authority as to the status of employees and also the time limits within which such decisions must be made. In addition, Employing Authorities must decide whether a person is entitled to a benefit under the Regulations. Each Employing Authority must also make decisions in certain discretionary areas. These policy decisions should be reviewed on a regular basis and publicised to members. A copy must also be supplied to the Administering Authority. The Local Government Pension Scheme Regulations also detail the procedure for deducting employees and employer’s contributions and the arrangements for payments to the Administering Authority. The Regulations enable administering authorities to produce a Pension Administration Strategy which will cover matters such as liaison and communication procedures between the administering authority and employers, as well as procedures which will aim to ensure both parties comply with statutory requirements and with any agreements about levels of performance. We therefore ask all Employers who participate in the fund with this Authority to nominate a person as the single point of contact for communications between your organisation and ourselves. The person nominated should be in a senior enough position to understand and act upon any information that we supply/discuss. In order to assist employers, we have prepared an employer nominated contact form for you to complete and return. It is also very important that you notify this office immediately, should there be any change to your nominated contact. We hold regular Employer forums (usually twice a year), the purpose of which is to go through Regulatory changes and administrative processes in an attempt to improve the trail of information essential in ensuring that scheme members entitlements are dealt with in a timely and accurate manner. We do hold a ‘Q & A’ session at the end of each meeting, which Employers can raise any pension related issues they may have, and staff from the pension’s office will be available after the meetings to deal with any member specific queries you may have. The invites to these Forums are issued to the nominated contacts held at your organisation, so again it is important that you keep us informed of any changes.

1. INTRODUCTION


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Some of the definitions used in this guide Employing Authority: the body/establishment employing someone who is eligible to be a member. Administering Authority: the County Council (Pensions Section). Schedule 2, Part 1 Bodies: County Council / District Councils / Fire Authority / Valuation Tribunal / Magistrates Courts Committee / Police Authority / Probation Committee / Further Education Corporation / Higher Education Corporation / a voluntary school, foundation or foundation special school or a technical institution assisted by the LEA where the LEA has, with the consent of his employer designated the employees to be eligible Schedule 2, Part 2 Bodies - Designating Bodies: Parish & Town Councils / A Company under the control of a body listed in Schedule 2. Non-Scheme Employers - Admitted Bodies: As a generalisation, this category can include non-profit making bodies’ representative of local authorities. In addition, certain private sector bodies to which a local authority service/function has been transferred as part of “Best Value”. These definitions are to be used as a guide only and nothing in the ‘Pensions User Guide’ can overrule current LGPS Regulations. If you are at all uncertain, please contact the Pensions Section. All the forms mentioned in this guide are available for downloaded from the GCC LGPS Employers’ Website, which can be found at the following link: www.gloucestershire.gov.uk/pensionsemployers. You should not keep any old stock of the documents held on the Employers’ website and should only print them off as required, thereby ensuring that only the most recent versions of the scheme documentation is used.

http://www.gloucestershire.gov.uk/pensionsemployers�


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Who is eligible to join? When you appoint a person to a post the first thing you need to do is determine whether they are eligible to join the LGP scheme and if so, whether they are to be admitted to the scheme automatically or whether they must make an election to join. Employees of Part 1 Scheduled Bodies who have a contract for 3 months or more and who are under age 75 (this includes casual members where mutuality of obligation exits) must be admitted to the Scheme automatically upon commencement. Should they not wish to remain a member, then they can make an election to cease membership of the Scheme by completion and return of a Scheme opt out form. Employees with a contract for less than 3 months and casual/claim Employees where NO Mutuality of Obligation exists (NO-MO’s) who are aged under 75, are also eligible for membership of the Scheme but, if they wish to join, they must make a written election to do so. Employees of Part 2 Scheduled Bodies (Designating Bodies) who have a contract for 3 months or more and who are under age 75 (this includes casual members where mutability of obligation exits) will be eligible for membership of the LGPS if they are designated for membership by their employer. Those designated for membership must be admitted to the scheme automatically from the date of commencement of the employment or from the date the designation is made, if later. Should they not wish to remain a member, then they can make an election to cease membership of the Scheme by completion and return of a Scheme opt out form. Employees with a contract for less than 3 months and casual/claim Employees where NO Mutuality of Obligation exists (NO-MO’s) who are aged under 75, will be eligible for membership of the LGPS if they are designated for membership by their employer but, if they wish to join, then they must make a written election to do so. Employees of Admission Bodies who have a contract for 3 months or more and who are under age 75 (this includes casual members where mutuality of obligation exits) will be eligible for membership of the LGPS, if they are designated, under the terms of the admission agreement. Those designated for membership, under the terms of the admission agreement, must be admitted to the scheme automatically from the date of commencement of the employment or from the date the designation is made, if later (prior to the 1st October 2012 those designated for membership had to make a written election, if they wished to join the Scheme). Employees with a contract for less than 3 months and casual/claim Employees where NO Mutuality of Obligation exists (NO-MO’s) who are aged under 75, will be eligible for membership of the LGPS, if they are designated for membership under an admission agreement but, if they wish to join, then they must make a written election to do so. The table overleaf gives an 'at a glance right of membership’ and method of entry to the scheme for employees from the 1st October 2012:

2. New Starters


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Whole time/Part time/’MO’

Casual Employees with a contract of less than 3 months/’NOMO’ Casual

Scheduled Body

Employee Right Automatic Entry

Employee Right By election

Designating Body

Employer Choice Automatic Entry

Employer Choice By election

Admission Body

Employer Choice Automatic Entry

Employer Choice By election

Where an employee’s original contract was for less than 3 months and their contract is subsequently extended so that, in aggregate, the contract periods are for 3 months or more, then the employee must be admitted to the Scheme from the date of the contract extension Just to recap, the following employees are not eligible for membership of the LGPS:

• Any Employees who are aged 75 or over • Any Employees you may have who are eligible for membership of the Teachers,

Police or the Fire-fighters Pension Scheme What rate of pension contribution do members pay to the Scheme? To give a little background to the scheme, prior to the 1st April 2008 all members of the scheme paid a static 6% of their salary to the scheme and certain “protected members” paid a lower rate 5% contribution rate. Following the introduction of the current LGPS Regulations from 1st April 2008, “banded” contribution rates were introduced for all existing and new members. The contribution rate to be paid is derived from the banded contribution table. The “pay bands” are increased each April in line with CPI. For those members previously paying the protected lower rate contribution of 5%, the contribution rate rose in stages until 2010/2011, after which time, members were banded in the same manner as all other scheme members (i.e. from 1st April 2011 there were no protected members). The staged protected rates were as follows; w.e.f. 1st April 2008 - 5.25%, w.e.f. 1st April 2009 - 5.5% and finally w.e.f. 1st April 2010 - the lower of 6.5% or the rate derived from the relevant banded contribution table (as increased by RPI to 1st April 2010) corresponding to the members annual whole time rate of pay. All employees will pay the relevant contribution assessed by you, as the employer, according to the whole-time rate of pay of their post. Pay band ranges will be increased each April in line with the cost of living. Information regarding the new pay band ranges will be issued to the nominated contact at each Employer, as held on our records, (which were notified to this office by each Employer) as and when it is received by this office. It is therefore very important that you notify this office immediately should there be any change to your nominated contact, so as to ensure that the information issued from this office is received by the right person at your organisation. Employers will need to establish their policy* on how new employees will be allocated to a contribution band, and determine in what circumstances the banding decision will be revisited.


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Employees will pay contributions according to the table shown above* based on their whole-time equivalent pensionable pay. Thus, the rate for a part-time employee will be determined by reference to the whole-time equivalent rate of pay, not on the part-time pay actually earned. Employers will also need to determine how to calculate the whole-time equivalent pensionable pay for:

- sessional workers, which should be reasonably straight forward where the payment

for the session is linked to an hourly rate derived from an annual pay figure / spinal column point

- fee earners, including those where a fee is paid as a separate payment for the role undertaken. For example, if a returning officer receives a fee of £8,000, separate from the salary for their main post, the contribution rate would be determined by reference to the amount of fee paid and so would be 5.5%, and

- employees with variable pensionable payments. The band for any whole-time term-time employee is the band relevant to the pay the person receives for the weeks they are paid for each year (weeks worked plus annual leave entitlement) e.g. 44 weeks rather than 52 weeks. The band for any part-time term-time employee is the band relevant to the whole-time equivalent pay the person would have received in the weeks worked e.g. 44 weeks rather than 52 weeks. It should be noted that, according to CLG, an employee whose post could be 52 weeks per year but who, for personal reasons (e.g. for work-life balance reasons or to fit in with school holidays), chooses with the agreement of the employer to work less than 52 weeks will not be treated as a term-time employee, but as a part time employee. It should also be noted that it is not appropriate or possible to reassess an employee’s band in consequence of that person going on to half or reduced pay (due to sickness or maternity, paternity, parental leave, adoption leave, etc) as the band has to be assessed by reference to the whole-time equivalent rate of pay for the job. The fact that someone has gone on to reduced or half pay does not alter the whole-time equivalent rate of pay for their job. *There is no requirement to have a written “policy” on contribution banding. However, it would be advisable to have a policy on how you will determine an employee’s contribution rate and when you will look at rebanding (for example on the 1st April of each year or as and when a member has a change in their pay) it would make sense for this policy to be a written one. This will help not only help your payroll and personnel officers in making their decisions when allocating employees to a contribution band but also ensure that that a consistent approach is taken for all employees. You will also need to determine when to reassess a member’s pension contributions rate. The Regulations allow an employer to reallocate an employee to a new band following a material change in their pay. Some examples of scenarios when an employer may decide to reattribute are:

a) once a year (possibly following Pay Award) b) upon a contractual change (i.e. change of post) c) whenever rate of pay changes (i.e. regrading)

It is entirely for the employer to decide the basis and timing of reattribution. It is important however, that the basis is fair and reasonable to all members. As already mentioned, a written policy would help demonstrate to members that you are applying your decisions consistently throughout the workforce.


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You may wish to note the following points when deciding your ‘policy’ on when you will reattribute a member and you should bear in mind that a consistent approach should be taken in all similar cases, so as your system of reattribution is fair and equal for all your employees. Each option has a number of pros and cons.

Under option (a) the bands would be reassessed, say, at the beginning of each April. The advantages of this approach are: i) it is the simplest approach from a payroll perspective ii) if reassessed at the beginning of the financial year there would be no

need to split pay bands and contributions on the end of year return to the Pension Fund administering authority.

The disadvantages of option (a) are:

i) if a person’s pay, because of a backdated pay award, a regrading, increment,

etc. increases during the year and the increase would have taken them into a new band, the person will not be allocated to that new band, paying the higher contribution rate, until the following April. Overall, the contribution “take” from employees would be marginally less than would have been the case if the bands were reassessed whenever there is a pay change. However, it is likely that it would be many years before this would have an impact on the employer’s contribution rate.

ii) if a person’s pay decreases (e.g. as a result of a downgrading, be that voluntary

or otherwise) and the decrease would have taken them into a lower band, the person will not be allocated to that new band, paying the lower contribution rate, until the following April. Persuading an employee in this situation that they should continue for the remainder of the year to pay at the higher rate might be difficult.

iii) if the reassessment is undertaken once a year, but the date chosen to do this is

not April (i.e. the beginning of the financial year), it would be necessary to split pay bands and contributions on the end of year return to the Pension Fund administering authority.

The advantages and disadvantages of option (b) are:

Advantages

i) it will only be necessary to look at reallocating to a new a band as and when

there is a contractual change for an individual member of staff. ii) employees will be put into the correct band as and when there is a contractual

change. This will mean that the employer will be getting the higher level of contribution from those whose pay goes up, and can reallocate where appropriate to a lower band where pay goes down, rather than delaying until, say, the following April.


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Disadvantages

i) it is not the simplest approach for payroll ii) it will be necessary to split pay bands and contributions on the end of year return

to the Pension Fund administering authority. iii) it will be necessary for the employer to define what is meant by a “contractual

change”. iv) the contribution take from employees might diminish over the years. For

example, an employee’s pay could increase every year by way of increments and pay rises and these might eventually have merited being placed in a higher band, but if (due to the definition used by the employer) there had been no “contractual change”, it would not be possible to move that employee into the higher band.

The advantages and disadvantages of option (c) are:

Advantages

i) employees will be put into the correct band as and when there is a change in

pay. This will mean that the employer will be getting the higher level of contribution from those whose pay goes up, and can reallocate where appropriate to a lower band where pay goes down, rather than delaying until, say, the following April.

Disadvantages

i) it is not the simplest approach for payroll. ii) it will be necessary to split pay bands and contributions on the end of year return

to the Pension Fund administering authority.

Also, if a person is reattributed to a new pay band on account of a retrospective pay award or regrading, etc, whilst the contributions on the arrears and on the pay from then on will be at the new rate, the employer will need to determine whether arrears of contributions should be collected on the pay already received (being the difference between the contribution rate the employee paid contributions at and the rate they should have paid contributions at if the pay award / regrading had been agreed at the correct time rather than being retrospective).


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Actions you need to take Employees who are eligible to be admitted to the scheme automatically upon commencement: Complete an ‘Employer Starter Notification’ form and send to this office as soon possible, ensuring that you keep a copy for your records. Issue a ‘Pension Starter Information pack – Automatic Entry to Scheme’ to the member. The member is directed to return the ‘pension starter & service history – automatic entry to scheme’ form (this document is contained within the ‘Pension Starter Information pack – Automatic Entry to Scheme’) direct to this office. Employees who are eligible to join but are NOT eligible to be admitted to the scheme automatically: Send a ‘Pension Starter ‘Pension Starter Information Pack – Entry to Scheme by Election’ to the member. If the member wishes to join the scheme, then they must complete the ‘pension starter & service history – entry to scheme by election’ form (this document is contained within the ‘Pension Starter Information Pack – Entry to Scheme by Election’) enclosed in the pack and return direct to you (the form directs them to do this). Once you have received a fully completed form, you should first check that the member is eligible for membership of the Scheme. Provided they are eligible, you should, in accordance with the LGPS Regulations, admit the employee to the scheme from the first day of the next convenient pay period/date of commencement of the employment, depending on when the completed form is received. Once you have brought the employee into the Pension Scheme, you should forward the completed ‘Pension Starter Information Pack – Entry to Scheme by Election’ form to this office (with any other forms the employee sent with this form) together with a fully completed ‘Employer Starter Notification’ form, ensuring that you keep copies of all documents sent to this office for your records. Please ensure that all the information regarding the member’s admission to the scheme is completed fully on the ‘Employer Starter Notification’ form, an incomplete form will be returned to you. The Pension Starter information packs (there is one pack for automatic entry to the scheme ‘Pension Starter Information pack – Automatic Entry to Scheme’ and one for entry to the scheme by election ‘Pension Starter ‘Pension Starter Information Pack – Entry to Scheme by Election’) are available on the pension website for you to print and issue direct to employees (the automatic entry to Scheme pack is only available on the Employer pages of our website and the entry to scheme by election pack is available on the Employer and member pages of the website). Ideally these packs should be sent with the members offer of employment, or as soon as possible after a post has been designated, if the designation is made post the member commencing employment. You should not keep stocks of these packs and should print them as and when you need them, this will ensure that you are always sending out the most recent version of the packs. In the event of any changes to the information contained in the packs, they will be updated automatically on the website.


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IMPORTANT NOTE: The ‘Employer Starter Notification’ form is the official notification from you to notify this office that an employee has been admitted to the scheme. It is therefore important that you complete this form as soon as you have admitted an employee to the scheme, and that you send it to this office without delay. Once we receive the completed form in the office, the member’s record is set up on our pensions system. Please complete as much of the employees personal information as possible and ensure that all of the information regarding the members admission to the scheme is completed. Even if the member has decided to opt out from the start of their employment, you must still send this form to this office. If you are unsure as to how to complete the forms, or what the form is asking for, then please ring this office and we will clarify any points for you. Please remember to keep copies of all the forms issued to this office, for your records.


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The ‘pension starter information packs’ (‘Pension Starter Information pack – Automatic Entry to Scheme’ and ‘Pension Starter Information Pack – Entry to Scheme by Election’) contains the following information/forms for the member to retain and complete (as appropriate) and return direct the pensions office and or the employer (depending on whether they are automatically admitted to the scheme or are admitted to the scheme upon their election – see above for details):

• Starter pack information sheet – this gives information of the documents contained in the pack (you should refer to this to ensure that all the relevant forms/information is contained in the packs that you issue to your employees) and advises the member of their right to opt out of the Scheme – this is for the member to keep

• Overview to New Local Government Pension Scheme – a brief summary of the

LGPS – this is for the member to keep

• Pension starter & service history form – the form for the member to complete their personal details and advise whether they have any pension benefits held elsewhere which they may wish to look at transferring to the LGPS (there are two of these forms, one where entry to the scheme is automatic and one for the member to make an election to join the scheme, where entry is not automatic)

• Expression of Wish form – the form for the member to ‘nominate’ a person/s to receive any death gratuity that may be due from the scheme in the event of their death

The following documents are also available on the pension website for members to complete, where appropriate. They have not been included in the pension starter pack, as we anticipate that only a small number of members will need these forms and we do not want to over complicate the pension starter information pack, the aim of the information pack is to include information that will be relevant and apply to all members/prospective members. The starter information sheet enclosed in the pack does make the member aware that these forms are available on the website, if required, and confirms the circumstances in which they should be used.

• Nominated Co-Habiting form – scheme members who meet certain criteria, the full details of which are given in the form, can nominate an eligible co-habiting partner to receive a dependant’s pension in the event of their death

• Combined Annual Benefit Statement form – included with the Annual Benefit

Statements (ABS) we issue each year is information regarding a member’s state pension, where made available by the Inland Revenue. However, if the member does not wish to have this information shown on their ABS then they can make a request for this not to happen by the completion and return of this form, which will be held on their record.

• Pension Scheme Opt-Out form– this is the form for members to complete and return if, once they have been admitted to the Scheme, they decide that they do not wish to remain a member.


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What do I do if I have an employee who is not in the scheme but wishes to make an election to join? Occasionally you may receive calls from employees who are not currently members of the scheme (employees who may have opted out previously or have never made an election to join the scheme, if they were not eligible upon commencement for automatic entry) asking if they can join the scheme. You should first check that they are eligible to join the scheme (see criteria above). Provided they are eligible, then you should issue a ‘Pension Starter Information Pack – Entry to Scheme by Election’ to the member, or direct them to the member pages of the website where they can print a copy. The member is directed to return their completed pension starter service & history – entry to the scheme by election form (this document is contained within the ‘Pension Starter Information Pack – Entry to Scheme by Election’) direct to their Employer. Once you have received the completed form you should first check that the member is eligible for membership of the Scheme, using the criteria information provided in this document. Provided they are eligible, you should then, in accordance with the LGPS Regulations, admit the employee to the pension scheme from the first day of the next convenient pay period/date of commencement of the employment, depending on when the completed form is received. Or from such other later date as specified by the Employee (an Employee who is not eligible for automatic entry to the Scheme can specify a date from which they wish membership to commence). Once you have brought the employee into the Pension Scheme, you should forward the completed Pension starter & service history form – Entry to Scheme by Election form to this office (with any other forms the employee sent with this form) together a fully completed ‘Employer Starter Notification’ form, ensuring that you keep copies of all documents sent to this office for your records. Please ensure that all the information regarding the member’s admission to the scheme is completed fully on the ‘Employer Starter Notification’ form, an incomplete form will be returned to you. If you receive a completed Pension starter & service history form – Entry to Scheme by Election form and the employee is not eligible for membership of the LGPS, then you must contact the member to confirm that they are not eligible and give the reason why. In these cases, a copy of the completed Pension starter & service history form – Entry to Scheme by Election form received, together with a copy of your reply, should be sent to this office for information. It is very important that you, as the Employer, ensure that you keep copies of all the member starter/opt out forms and employer starter notification forms issued to this office for your records.


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General notes regarding admission to the scheme Backdated contributions should not normally be taken. However there are sometimes exceptions to this rule i.e. perhaps the ‘Pension Starter ‘Pension Starter Information Pack – Entry to Scheme by Election’ pack is issued late to an employee, which would delay entry to the Scheme but through no fault of the employee. If in doubt, please contact the Pensions Section. Employees with more than one contract do have the right to opt out of membership in all or some of their employments. The opt out form does advise them that if they wish to opt out on certain posts and remain in the scheme on others, then they must provide a covering letter with the completed opt out form clearly stating the posts on which they wish to continue paying pension contributions. Under the 1997 Regulations, an employee who opted out more than once could not rejoin unless the employer agreed, this was amended in the 2008 Regulations and an employee can now make as many elections as they wish. If there is any reference in your policy statement regarding the employer’s discretion allowing employees who have opted out to rejoin, then you should remove this from your policy statement. What do I do if I receive a request from a member asking to opt out of the Scheme? If you receive a request from a member to opt out of the Scheme, which they can only do once they are actually a member of the Scheme, then you should direct them to the member pages of the website to obtain a copy of the Scheme Opt-Out form or to this office to obtain a copy. As the Employer, you must not provide the member with a Scheme Opt-Out form as under the safeguarding of pensions regulations issued by the Pensions Regulator; an Employer must play no part in a member opting out of the Scheme. The ‘pension starter information pack – automatic entry to scheme’ does make this point very clear to the member. What do I do once I have received a completed opt out form from the member? You should first check how long the employee has been a member of the scheme. If at the date you bring them out of the scheme (the first day of the next convenient pay period following receipt of their completed form) they have contributed to the scheme for less than 3 months, then you should refund the contributions deducted back to the member via an adjustment to their pay. A copy of the completed scheme opt out form (with the relevant ‘for office use’ section completed on the reverse of the form to confirm what action has been taken by you regarding this case) should then be sent to the pensions office, without delay, once the relevant opt out form has been actioned. If you have not already sent an ‘Employer Starter Notification’ form to this office, which you should have sent to this office as soon as the member was brought into the Scheme, then please ensure that this form is completed and sent with the opt out form. Again, you should ensure that you keep copies of all of the documents/forms sent to this office, for your records. If at the date of opting out the member would have attained 3 months or more membership in the scheme, then you should send the completed opt out form to this office together with a completed Leaver 1 form. Again, if you have not already sent an ‘Employer Starter Notification’ form to this office, which you should have sent as soon as the member was brought into the scheme, then please ensure that this form is completed and sent with the relevant opt out and Leaver 1 form. Again ensuring that you keep copies of all the documents/forms sent to this office, for your records.


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A refund can be only be paid where the member has contributed to the scheme for LESS than 3 months, for example if a member was admitted to the scheme on the 5th September 2012 and the completed opt out form was received on the 4th December 2012, then you earliest date you could bring them out of the scheme would be from the 1st December, which means the last day they contributed to the scheme would be the 30th November 2012 and they would therefore be eligible to receive a refund of contributions. However, if they had commenced membership of the scheme on the 1st September 2012 and the opt out form was received on the same date (4th December 2012), the earliest possible date they could be brought out of the Scheme would be the 1st December 2012. At this date the person would have attained 3 months membership in the scheme, (1st September 2012 to the 30th November 2012), and is not therefore entitled to receive a refund of the contributions paid. This period of membership would be deferred in the scheme. General notes regarding opting out of the scheme You should only accept a fully completed current Opt-Out form (if you are not sure what the current version of the form is, then please see the opt out form on the member pages of our website, as only the most recent version of all of our forms are held here) as an election to cease membership of the Scheme, and the Opt-Out form MUST NOT be dated before the date on which the member commences to the post to which membership of the Scheme relates. If you do receive an opt out form which is dated prior to the date on which the member commences to the post to which membership of the LGPS relates, then you should return the form to the member for amendment and return. If you receive a letter from the member stating they wish to opt out, then you must contact them to advise that they need to complete a scheme Opt-Out form, which they must obtain from the member pages of our website or this office, remember the Employer must not provide an Opt-Out form to a member. Under no circumstances should you instigate an opt out from a letter or verbal request, you should only accept a fully completed opt-out form which is dated on or after the date on which the member commences the employment to which membership of the Scheme relates. If you were to bring a member out of the Scheme without a fully completed Opt-Out form, then you would be leaving yourself open, as an Employer, for a possible appeal in the future from the member, for example if the person claims that they were not aware of the benefits they were giving up by opting out of the scheme. The scheme Opt-Out form requires the member to sign to say that they have read the guide to the LGPS and that they are aware of the benefits they are giving up by making an election to opt out of the scheme. There may also be consequences of not accepting an Opt-Out form as notice to cease membership of the Scheme from the Pensions Regulator, as once auto enrolment comes into effect, your records may be audited by them to ensure that all the correct documentation has been received for members who have opted out. Section 5 of this guide does provide further information regarding opting out of the scheme.


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Given below is an overview of the decisions that must be made by an Employing Authority, as to the pensionable status of an employee.

RESUME OF THE DECISIONS TO BE MADE BY THE EMPLOYING AUTHORITY, AS TO PENSIONABLE STATUS OF EMPLOYEES.

- employees of Part 2 Scheduled Bodies (Designating Bodies) and employees of Admission Bodies, whether the employee can be a member. - the rate of pension contributions the member should pay - whether the employee is whole time, part-time or casual. - whether the employee is paid term-time and if so, the number of weeks per year for which the employee is paid. - date of commencing pension contributions (employees of Part 2 Scheduled Bodies (Designating Bodies) only). - which of his/her emoluments are pay on which contributions are payable. AND if he/she is a part-time employee, - the proportion which his contractual minimum hours of employment in each week bear to those of a comparable whole-time employment.


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Where a member has any of the following changes, they should be notified on the ‘Con-Change’ form to this office as soon as possible:

- Change in contractual hours. - Change in term time weeks (as this affects the average annualised hours). - Change of name through marriage. - Change of address - In all cases where a member has a leave of Absence for the following reasons and

has NOT elected to pay the relevant pension contributions, please confirm the period/s for which no contributions have been made:

- due to granted unpaid leave. - due to strike action. - due to maternity or adoption leave. The cases of absence listed above are all to be treated in a slightly different way; we have therefore given below information on how to deal with each type of absence: How do I deal with an authorised leave of absence? Absence of less than 30 days - For authorised leave of absence on reduced or no pay for less than 30 days, employers should ensure that standard contributions are paid on the pay the employee would have received but for the authorised absence. The pension contributions due for this period should be deducted from the last payment the member receives before the period of authorised leave of absence commences, and the employer pays their contribution on this sum as normal. Absence of 30 days or more - For authorised leave of absence on reduced or no pay for more than 30 days, employers should ensure that, for the first 30 days of authorised absence, standard contributions are paid on the pay the employee would have received but for the absence. Again the pension contributions due for this period should be deducted from the last payment the member receives before the period of authorised leave of absence commences and the employee pays their contributions on this sum as normal. No further contributions should be deducted until the employee returns to work, at which time they should be notified of the arrears of employees contributions due and given the option to repay the amount over the lesser of a period equal to i) that which they were on leave; or ii) 36 months. The employees contributions due are based on the notional pay they would have received had they not been absent.

Please note that the maximum period a member can repay is 3 years and the first 30 days is included in this 3 years i.e.: 3 years from the first day of period of authorised leave of absence. The employee has 30 days from the date on which you send notification of the amount due in which to elect to pay the arrears. If the member ceases to be employed without returning to employment, then there is still an option to repay the contributions. You should advise the member of the amount due as normal, they then have 30 days from the date of ceasing or the date on which you notify them of the amount due if later, to make payment of the total arrears by payment of a one off lump sum.

3. HOW TO NOTIFY THIS OFFICE OF MATERIAL CHANGES DURING A MEMBERS PENSIONABLE EMPLOYMENT


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PLEASE NOTE:

Where a member is paying additional contributions to purchase added years or ARCS (additional regular contributions) in the Scheme then these deductions must continue during the period of the granted unpaid absence, based on the pay that the member would have received but for the absence. You will need to make arrangements with the member regarding this.

Where a member is paying AVC’s (additional voluntary contributions) then the member may continue to pay these at the same amount they were paying immediately before the absence period began, we would therefore suggest that you contact the member prior to the absence commencing to ask if they wish to continue to pay the AVC’s during the period of absence. If so, then you will need to make arrangements with the member regarding this.

If the employee elects to pay the arrears due in respect of the period of granted unpaid leave, then the employing authority must also pay the appropriate employers contributions that would have been due during that time.

If the employee does not elect to pay any arrears due in respect of a period of granted unpaid leave, then you must notify this office of the period of unpaid absence, by completing a ‘con-change’ form, so as this can be recorded on the members pension record.

How do I deal with Strike Action? For periods of STRIKE ACTION, once the period of strike action is over, the employee should be given the option of paying contributions at the rate of 16% of notional pay for the period of absence. The member has 30 days from the date on which the notification was received in which to make an election to pay. - THIS DOES NOT ATTRACT EMPLOYERS CONTRIBUTIONS. PLEASE NOTE:

Where a member is paying additional contributions to purchase added years or ARCS (additional regular contributions) in the Scheme then the amounts due for the strike day/s must be deducted, based on the pay that the member would have received but for the strike absence.

Where a member is paying AVC’s (additional voluntary contributions) then they may continue to pay these at the same amount they were paying immediately before the absence period began, we would therefore suggest that you contact the member prior to the strike day/s to ask if they wish to continue to pay the AVC’s during the period of absence.

If the employee does not elect to pay the contributions due in respect of a period of strike action, then you must notify this office of the strike day/s absence, so as this can be recorded on the members pension record.


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How do I deal with Periods of Paid Maternity/paternity and Adoption leave? For periods of paid MATERNITY/ADOPTION LEAVE, deduction of contributions should be continued on all pay received during the absence, (pay in this context means actual contractual salary and/or SMP). The member is still credited with membership based on their contractual working hours, even though they will be paying pension contributions on reduced occupational maternity pay (OMP) and/or Statutory Maternity Pay (SMP). DURING A PERIOD OF PAID MATERNITY/PATERNITY/ADOPTION LEAVE, the Employing Authority must pay the appropriate Employer contribution due; based on the notional full pay the member would have been receiving had they not been on maternity/adoption leave (and not the reduced pay the member is receiving). IN THE CASE OF A MEMBER WHO IS NOT ENTITLED TO RECEIVE ANY SMP/OMP DURING A PERIOD OF MATERNITY/ADOPTION, the Employer must also ensure that they pay the appropriate Employer contribution due during weeks 1 to 26 (the period of Ordinary Maternity Leave) of the absence, based on the notional full pay the member was receiving the day before the OML commenced the period of maternity/adoption leave. What about Periods of Unpaid Maternity/Paternity and Adoption Leave? If the absence continues into a period of Unpaid Maternity/Paternity/adoption leave, the employee must, within 30 days of returning to work or terminating employment, whichever is the earlier, be given the chance to elect to pay contributions for that period. The contributions will be based on the OMP and/or SMP in payment the day immediately preceding the commencement of the Unpaid period of absence. Again, if the member returns to work, they can repay the amount over a period equivalent to which it relates and as with normal unpaid leave, the appropriate employer’s contribution MUST also be paid. If the member has terminated their employment and they wish to pay the arrears due, then they must make payment by a one off lump sum, again the appropriate employer’s contribution must also be paid. If, for the period of maternity/paternity/adoption leave, the person is not entitled to receive any SMP or OMP, then under the Regulations the member is still credited with the membership they would have accrued during the period of ordinary maternity leave (weeks 1 to 26) based on their contractual working hours, even though they have not paid any contributions to the Scheme during this period. If the absence continues beyond week 26, the employee must, within 30 days of returning to work or terminating employment, whichever is the earlier, be given the chance to elect to pay the contributions due from week 27 (the period of Additional Maternity Leave) to the date of return/date of leaving, whichever is applicable. The contributions due are based on the pay the member was receiving the day before the period of OML commenced. PLEASE NOTE:

Where a member is paying additional contributions to purchase added years or ARCS (additional regular contributions) in the Scheme then these deductions must continue during the period of the unpaid absence, based on the pay that the member would have received but for the absence. You will need to make arrangements with the member regarding this.

Where a member is paying AVC’s (additional voluntary contributions) then the member may continue to pay these at the same amount they were paying immediately before the


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absence period began, we would therefore suggest that you contact the member prior to the absence commencing to ask if they wish to continue to pay the AVC’s during the period of absence, if so, then you will need to make arrangements with the member regarding this. If the employee does not elect to pay the arrears due in respect of a period of unpaid leave, then you must notify this office of the period of unpaid absence, by completing a ‘con-change’ form, so as this can be recorded on the members pension record. Please remember that for a member who is not entitled to any SMP or OMP, you only need to notify this office of any unpaid leave they may have beyond week 27 of their period of maternity/adoption absence, as under the Regulations they are still credited with the membership they would have accrued up to week 27, had it not been for the maternity/adoption absence.


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What do I do if I have a member who is on reserve forces leave? A person who is on reserve forces service leave must pay his/her basic pension contributions (and any additional contributions he/she may be paying to purchase added years or ARC’s in the LGPS) if, and only if, during the period of leave the members reserve forces pay equals or exceeds the pay they would have received from the authority if they had not gone on reserve forces service. If this is the case, contributions would be due on the reserve forces pay and the service would count in full for pension purposes. You will need to make arrangements with the individual for the pay over / recovery of the employee’s contributions; If, however, the reserve forces pay does not exceed the pay they would have received from the authority if they had not gone on reserve forces service, pension contributions (including any additional contributions they may be paying to purchase added years or ARC’s in the LGPS) are deemed to have been paid and the service counts in full for pension purposes. DURING THIS TIME THE EMPLOYING AUTHORITY MUST PAY THE APPROPRIATE EMPLOYERS CONTRIBUTION BASED ON THE PAY THE MEMBER WOULD BE RECEIVING HAD THEY NOT BEEN ON RESERVE FORCES LEAVE.

What do I do if I have a member who is paying ARC’s or Added Years and they are absent from work due to an authorised leave of absence, jury service, strike action, maternity, paternity or adoption leave?

If a member have entered into a contract to buy extra pension (ARCs) or extra LGPS membership (added years) and they are absent from work due to any of the above absences, then you must make arrangements with the member in order to continue the extra pension payments and/or payments to buy additional membership they are contracted to pay as if they were not on leave, based on the pay they would have received had they not been on leave (unless the person opts to stop paying any such contributions). The person may continue to pay any Additional Voluntary Contributions (AVCs) they were paying. Example of maternity/adoption leave arrears calculation Member commences maternity leave on the 2nd May 2011 and returns to employment on the 8th March 2012. The member received 12 weeks contractual maternity pay and statutory maternity pay for 26 weeks. The day before the member went onto unpaid leave she was receiving SMP only at the rate of £100 per week, the calculation of the arrears due in respect of the unpaid period is therefore as follows: Commenced unpaid maternity leave on the 31st October 2011 (26 weeks from the 2nd May 2011) returned to employment on the 8th March 2012, therefore period of unpaid maternity is from the 31st October 2011 to the 7th March 2012. 31/10/2011 to 7/3/2012 = 18 weeks and 2/7ths 18 2/7 x £100 = £1,828.57 x pension contribution rate payable by the member, which in this case was 6.5%, = £118.86 total arrears due The member was on unpaid leave for four months, therefore the arrears could be deducted over a maximum period of 4 months.


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Example of granted unpaid leave arrears Member was on granted unpaid leave for the period 2nd May 2011 to the 31st May 2012. Pension contributions were taken for the first 30 days from her last payment before commencement of the unpaid leave, therefore the period of unpaid leave if from 1st June 2011 to the 31st May 2012. Rate of Pay during this period as follows: 1st April 2011 £20,000 1st April 2012 £21,500 Arrears calculation as follows: 1/6/11 to 31/3/12 10 months at £20,000 = £11,666.66 pensionable pay due 1/4/12 to 31/5/12 2 months at £21,500 = £3,583.33 pensionable pay due TOTAL PENSIONABLE PAY DUE £15,249.99 Therefore £15,249.99 x pension contribution rate by the member, which in this case was 6.5% = 991.25 total arrears due in respect of period 1st June 2011 to the 31st May 2012. The arrears can be deducted over a maximum period of 12 months. Points to Note As stated above, if the member’s period of unpaid leave exceeds 3 years, then the maximum period that can be reinstated is 3 years and the maximum period of repayment is 36 months. What do I do if I have a member who is on reduced pay/no pay sickness? The member will pay pension contributions on any SMP/Occupational Sick pay they receive and, under the Regulations, the member is still credited with the membership they would have accrued during the period of reduced pay/no pay sick based on their contractual working hours. PLEASE NOTE: During any period where the member has received reduced pay/no pay due to sickness, the Employer must continue to pay the appropriate Employers contribution based on the notional full pay.


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There are generally two types of leaver:

- those who are entitled to receive immediate retirement benefits and, - those whose benefits are either to be held in the scheme as a deferred benefit,

transferred out to another pension scheme which is fully approved by the Inland Revenue or who are to have their contributions refunded.

When a member terminates employment, the Employing Authority must supply certain information to the Pensions Section in order to calculate the member’s benefits. In all cases, a ‘Leaver 1’ form must be fully completed by the Employing Authority and sent to the Administering Authority immediately. The ‘leaver 1’ form includes all the information that the Regulations require the Employing Authority to provide to the administering authority, in order to calculate a member's benefits. In accordance with the Pensions Administration Strategy, the fully completed leaver 1 form must be sent to this office by:

• For a member who is retiring and will be receiving immediate payment of their benefits or in the case of a death in service, on or before 5 working days after the last day of employment.

• For all other leavers, within 5 weeks of the employee leaving.

The back of the form is used to supply the pay on which the benefits will be calculated. This should generally be the pay received, or deemed to have been received in the case of someone who has not been in receipt of their normal full pay, i.e. due to half pay sickness, during the final 365 days of employment. For example, if someone were to leave on the 14th April 2012, the pay received for the period 15th April 2011 to 14th April 2012, on which pension contributions have been deducted and which also relate to this period, would be required. In addition to the ‘Leaver 1’ form you also need to issue the relevant form/s (either a leaver 2 form or a retirement information guide) to the member for completion and return. What forms do I send to the member? In all cases where an employee is retiring, a ‘Retirement Information Guide’ must be sent to the employee. Ideally this should be issued to the member as soon as you receive notification of their retirement. In every other case, except death in service, a ‘Leaver 2’ form must be sent to the employee. All claims for benefit must be supported where necessary, with the appropriate supporting documents for example:

• a medical certificate (if terminated on Ill Health grounds).

4. HOW TO DEAL WITH MEMBERS WHO LEAVE THE SCHEME


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• a letter of "approval" from the Employing Authority if the member is dismissed under Redundancy or Efficiency of the Service.

• a letter of approval where the member is aged between age 55 and 60 and the employer has agreed to the early release of their benefits under flexible retirement.

• a letter of approval where the member is aged between age 55 and 60 and the employer has agreed to the early release of the members benefits under Employers Consent Retirement.

• Details of any additional membership/additional pension you may wish to grant

must also be included. In order to assist you in providing the correct information, the ‘Leaver 1’ form does specify what additional information is required for each particular type of retirement.

Medical Retirements Copies of the medical certificates that need to be completed in the event of an ill health retirement are available on the employer’s pages of our website at the following link: www.gloucestershire.gov.uk/pensionsemployers. There is one certificate for serving employees and three certificates for deferred members depending on the date the member left employment, plus a tier 3 review certificate. Each of the certificates is clearly titled at the top of the first page as to its use, but if you do require any further clarification you should contact this office. You should also ensure that your appointed medical officer/occupational health unit are made aware of these requirements. In order to assist Employers in the medical retirement process the CLG have produced a guide on the ill health retirement pension provisions, as follows Final draft statutory ill health guidance 19 November 2008 (2).doc The different categories of retirement and leavers are shown on the following table together with details of the any other information that is required depending on the type of leaver/retirement. P45’s In the event of a member retiring (other than on the grounds of flexible retirement) please can you ensure that the P45 is sent to this office with the completed ‘Leaver 1’ form. I have spoken to the tax office on this point and they have agreed that it would be ‘best practice’ to do this.

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Reason for Leaving Form to be sent to

Employee Form/Other information to be sent to the Pensions Office

Normal Retirement (age 65) ‘Retirement Information Guide’

‘Leaver 1’ P45 required

Voluntary Retirement ‘Retirement Information

Guide’

‘Leaver 1’ P45 required

(between age 60 and 65 years with 3 months or more membership)

Employers Consent ‘Retirement Information

Guide’

‘Leaver 1’ Letter of approval for the retirement signed by an authorised signatory

(between age 55 and 60 years with 3 months or more)

P45

Flexible Retirement (between age 55 and 60 years with 3 months or more membership)

‘Retirement Information Guide’

‘Leaver 1’ Letter of approval for the retirement signed by an authorised signatory ‘Employer starter Notification’ form showing members new contractual details from the day after date of flexible retirement should be sent together with the completed ‘Leaver 1’ form

Redundancy (between age 55 and 65 years with 3 months or more membership)


‘Leaver 1’ A letter of approval for the retirement signed by an authorised signatory to include confirmation of the length of additional membership/additional pension to be granted (if any) The amount of the Redundancy payment made to be completed on the ‘Leaver 1’ form

P45 Interests of Efficiency (between age 55 and 65 years with 3 months or more membership)


‘Leaver 1’ A letter of approval for the retirement signed by an authorised signatory to include confirmation of the length of additional membership/additional pension to be granted (if any)

P45


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- Permanent Ill-Health ‘Retirement Information Guide’

‘Leaver 1’ Medical certificate signed by an independent registered medical practitioner qualified in occupational health medicine P45

(minimum of 3 months membership)

Death in Service (irrespective of length of member –ship)

N/A ‘Leaver 1’ It is imperative that the Pensions Section is notified as soon as possible whether the deceased left any dependants, i.e. widow(er), civil partner, children and if not, the name and address of the next of kin. (N.B. a copy of the Death Certificate and where relevant, copies of the widows/widowers and children’s birth certificates must also be sent to the Pensions Section with the leaver 1 form.)

Leaves employment with LESS than three months membership, but does not fall within any of the above categories and terminates due to :

Voluntary Resignation ‘Leaver 2’ ‘Leaver 1’

Dismissal ‘Leaver 2’ ‘Leaver 1’

If dismissed due to misconduct, confirmation as to whether benefits are to be withheld.

Redundancy (aged under 55) ‘Leaver 2’ ‘Leaver 1’

Leaves employment with 3 months or MORE membership, but does not fall within any of the above categories and terminates due to :

Voluntary Resignation ‘Leaver 2’ ‘Leaver 1’

Dismissal ‘Leaver 2’ ‘Leaver 1’

If dismissed due to misconduct, confirmation as to whether benefits are to be withheld.

Redundancy (aged under 55) ‘Leaver 2’ ‘Leaver 1’


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POINTS TO REMEMBER WHEN COMPLETING LEAVER 1 FORM What pay period should be supplied? The Regulations state that a member’s final pay period is the year ending with the day on which he stops being an active member of the Scheme or, if that would produce a higher figure, either of the two immediately preceding years. As the Employer, you are responsible for ensuring that you check your pay records to see which of the final three years, ending with the date of leaving, yields the highest figure. If either of the two years preceding the final year does yield a higher figure than the final year, then you must show this information on the ‘Leaver 1’ form and state clearly the period to which this pay figure relates. The pay figure for the final 12 months must also be supplied on the ‘Leaver 1’ (there are two separate pay fields on the ‘Leaver 1’ form for you to provide this information). If you need to provide any further information, then please attach a separate sheet to show any additional workings. N.B Previous years may only apply if the Wholetime equivalent salary in such a year would reap a higher figure than the comparable Wholetime equivalent salary in the final year. If a member leaves on or after 1st April 2008, and within 10 years of leaving, the member (voluntarily or compulsorily) has restricted pay, reduces their grade or moves to a position with less responsibility. Then the member can elect for the average of any 3 consecutive years pay in the last 10 years ending on a 31st March (plus RPI from the end of the 3 year period) to be used in the calculation of their benefits. Any election must be made in writing no later than one month prior to the date on which the member ceases active membership. Therefore, if a member does make such an election, the Employer is required to check their pay records and ensure that they provide the pay information, in accordance with the above, that yields the highest figure. In these cases, please ensure that a sheet showing the additional pay information is attached to the ‘Leaver 1’ form and that the pay figure for the final 12 months is also supplied on the ‘Leaver 1’ form in all cases. If the member has a certificate of protection held on your records (these could be issued in cases where a members pay has been reduced or restricted by the employer and this took place before the 31st March 2008) then the pay figure may be the highest of the last five years or the three year average in the last thirteen, ending with the anniversary of the date of termination. (Certificates of protection cannot be issued where such a change takes place on or after the 1st April 2008, as this provision has been removed from the 2008 Regulations and replaced by the above provision). If a member does have a certificate protection, then the Employer is required to check their pay records and ensure that they provide the pay information, in accordance with the above, that yields the highest figure. In these cases, please ensure that a sheet showing the additional pay information is attached to the ‘Leaver 1’ form and that the pay figure for the final 12 months is also supplied on the ‘Leaver 1’ form in all cases. If you are using a different year to the last, then please ensure that the period is clearly shown on the pay ‘to and from’ boxes. In addition, where you are showing a period other than the final twelve months, then you must ensure that you also supply details of the pay received in the final twelve months, ending with the date of leaving. Employers will therefore need to ensure that payroll data is kept for 10 years in respect of all cases falling into the above categories.


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What do I need to do if the member has changed their hours during the relevant pay period? If the member has had a change in contractual hours during the relevant pay period, then you must split the pensionable pay at each hour changes and show this information on the ‘Leaver 1’ form i.e. Pensionable pay period 1/4/2011 to 31/3/2012 Total Pensionable Pay for above period £15,000 Hours 1/4/2011 15/37 1/10/2011 30/37 Pensionable Pay to be split as follows on the Leaver 1 form: 1/4/2011 to 30/9/2011 £3,750 1/10/2011 to 31/3/2012 £11,250 What do I do if the member has had a period where no contributions have been deducted during the relevant pay period? If the employee has had a break of membership where contributions have not been paid, i.e. in the following circumstances: (i) Unpaid Leave (ii) Strike action (iii) Unpaid maternity/adoption leave Then the final pay figure supplied must be the final pay received in the year ending with the day on which the member stops being an active member only and you must ensure that you clearly show the periods to which the final pay relates. When we receive the completed ‘Leaver 1’, we then ‘gross up’ the actual final pay the member has received to 365 days; this is the figure which is then used to calculate the member’s benefits. (Previously, under the old Regulations, an Employer was required to supply details of the final pay received in the last 365 days where contributions were paid, which meant that if, for example, a member left on 31/12/09 but had a one months period of unpaid leave during the final twelve months, then the Employer would have needed to go back one month prior to the year ending with the day on which the member stops being an active member in order to supply the final pay figure). What do I do if the member has had a period of no pay/half pay during the relevant period? If the member has had a period of sickness where they received ½ pay or no pay or had maternity/paternity/adoption leave where contributions have been paid/deemed to have been paid, then please ensure that the pensionable pay is ‘grossed up’ to show the amounts they would have received had it not been for the period of absence. There is a separate box on the pensionable pay form to show the pay that relates to this.


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What do I do if the member has received payments in addition to their contractual pay during the relevant period? If the member has received any pensionable payments in additional to their contractual pay during the relevant pay period, i.e. honorarium payments, then please can you specify the amounts separately in the pensionable pay calculation, in the box provided, and state clearly what the payments are for and the period to which they relate. In the case of an honorarium you should only include the part which relates to the relevant period. For example, the relevant pay period is 1st April 2011 to 31st March 2012, the member received an honorarium payment in July 2011 which was in respect of the period 1st January 2011 to the 31st July 2011, you would therefore only include the proportion of the honorarium which relates to the period 1st April 2011 to 31st July 2011 (4/7ths of the amount received) in the relevant pay figure. Pension contributions must not be deducted on Pay in Lieu of notice or holiday payments made at leaving.


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Under the Regulations, all members have the right to "Opt-out" of the scheme, if they so wish. The procedures to be followed are:

Opting-Out : Form to be completed by member.

Action to be taken and further information to be supplied by Employing Authority

member has contributed to the scheme for less than 3 months

Opt-Out form (Employers must not provide a member with a copy of this form; the member must obtain a copy from our website or this office).

Pension Contributions must be refunded to the member via the Payroll and you should ensure that the corresponding Employer contributions paid are recovered from the Fund by reducing the next months pension contributions pay over (please ensure that you clearly show the reason for the reduction on the monthly spreadsheet). A copy of the completed ‘Opt-Out form’ with the ‘for employer use only’ section on the form fully completed to confirm the action taken must be sent to the Pensions office. Employer Starter Notification form, if this has not yet been sent to the Pensions Office (this should be completed and returned to this immediately upon a member being brought into the Scheme).

Member has contributed to the scheme for 3 months or more

Opt-Out form (Please remember that Employers must not provide a member with a copy of this form; the member must obtain a copy from our website or this office).

‘Leaver 1’ form, and a copy of the completed Opt-Out form with the ‘for employer use only’ section on the form fully completed to confirm the action taken, must be sent to the Pensions office Employer Starter Notification form, if this has not yet been sent to the Pensions Office (this should be completed and returned to this immediately upon a member being brought into the Scheme).

An employee who has "Opted-out" of the scheme has the right to opt back in again at any time and there is no limit on the amount of times a member can make an election to opt-out and opt back in again. If a member who has opted out does wish to re-join, then please see page 13 question what do I do if I have an employee who is not in the scheme but wishes to make an election to join? For information about what to do.

5. OPTING-OUT


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From time to time it may be necessary for the Employing Authority to request provisional benefits. All requests should be made in writing using the ‘Prov-Request’ form. Please note that in cases of requests for ill-health estimates, these calculations will only be done once we have received a copy of the completed medical certificate confirming which tier the member falls into. The reason for this is that there are currently three tiers for ill health retirement, with the ill health enhancement granted varying between nil (tier 3) and the member’s potential membership to age 65 (tier 1). Depending on the tier the member is assessed as falling into, the benefits payable could be significantly different and without confirmation of the actual tier which applies, could mean that any figures provided would be much higher than the eventual amounts payable. Every effort will then be made by the Pensions Section to comply with your request as quickly as possible, the timeframe set the Pension Administration Strategy for providing estimates is 15 working days, should we not be able to provide the information in this timeframe, then we would let you know accordingly and confirm the reason for the delay. It should be noted that figures cannot be supplied by return of post and this timescale should be taken into account when requesting data, although where the request is urgent, we will endeavour to provide the information within an earlier timeframe, but this is dependent on the resources and workload of the office at that time. The Pensions Section does pay close attention to the accuracy of the figures provided but occasionally errors and oversights will occur. Please check that the data used in the calculations is correct. Quotations for benefit calculations are PROVISIONAL and must be treated as such. If it is subsequently found that any data used is inaccurate, the final benefits payable may differ from those shown in the illustration. (A note to this effect is clearly stated on the benefit calculation document) When completing the pensionable pay figure on the ‘Prov-Request’ form please bear in mind the notes given on completing the ‘Leaver 1’ form i.e. ensure the pensionable pay is split if there has been an hour change during the pensionable pay period and specify if any pensionable payments are included in addition to the contractual pay and the reason for these payments. If there are any discrepancies then we will have to refer the form back to you for amendment, which will delay the calculation.

6. PROVISIONAL BENEFIT CALCULATIONS


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No old style certificates of protection can be issued in respect of pay drops / restrictions in pay that are outside of the employee’s control that occur on or after 1st April 2008. In the event of a member who has been issued with a certificate of protection leaving the Scheme, you must ensure that you comply with the Regulations and calculate the pensionable pay accordingly. Full details of relevant periods are provided on the certificate of protection itself, so you will need to refer to your copy for further details Employers will, of course, need to ensure that payroll data, for cases where certificates have been issued is kept for a minimum of 13 years. If, on or after 1st April 2008 and within 10 years of leaving, a member (voluntarily or compulsorily) has restricted pay, reduces their grade or moves to a position with less responsibility, the employee can choose to use the average of any 3 consecutive years pay in the last 10 years ending on a 31st March (plus CPI from the end of the 3 year period). Employers will therefore need to ensure that payroll data is kept for 10 years, in respect of cases falling into the above category.

7. CERTIFICATE OF PROTECTION OF BENEFITS


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Deductions are to be made in accordance with the Regulations and remitted to the Administering Authority at the end of each month. You are also required to provide information on the breakdown of the contributions paid each time a payment is made, to the pension’s investment section, by completion of the relevant monthly contribution return spreadsheet, as provided by the Pensions Investment Section. Full details of the breakdown required are given in the spreadsheet. This must be submitted electronically to the pension’s investment section to Jackie Bailey e-mail [email protected]. If you do have any queries regarding the completion of the monthly return, or require a copy of the spreadsheet, then you should contact: Jackie Bailey Senior Accounting Technician Tax Control & Pensions Finance Telephone: 01452 425916 E-mail (as above) Please note that it is a requirement of the Pensions Act 1995 that employees’ contributions must be paid into the Fund WITHIN 19 DAYS of the end of the calendar month in which those contributions have been deducted. If payment is delayed beyond ONE CALENDAR MONTH of the due date, this being the last day of each month, interest will be charged on the outstanding sum in accordance with Regulation 82. End of Year Return At the end of each Financial Year, an alphabetical tabulation will be required showing all individuals who have paid contributions during the relevant year. The spreadsheet ‘Year End Return’ contains full instructions and guidance on how to complete the return. The spreadsheet is available on the Employer pages of our website, should there be any changes to the information that is required or the format in which it is required, then the year end return would be updated accordingly the nominated contact at each Employer informed of the change. Before completing the year end return you should check that the information is current and you should always download a copy from our website and not use any previous year end returns submitted as templates. The completed Year End Return should be sent to: [email protected]. Should the date submitted not be in the correct format or provide all the information requested, then it would be returned to you for amendment. If you have any problems with the format of this file please contact Pella Fairey on 01452 426346 or [email protected]. All Year End Returns MUST be electronically submitted in the standard spreadsheet format by the 31st May each year. There are NO exceptions to this.

8. PAYMENT OF PENSION CONTRIBUTIONS

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Employees may, if they so wish purchase additional benefits by one or both of the two methods explained below: Added Years The facility to purchase added years was removed from the Scheme with effect from the 31st March 2008 and no new elections to purchase added years can be made after this date. For the existing members who are paying added years, each Employing Authority must have available a system whereby the appropriate set percentage deductions can be made directly from the employee, giving tax relief at source. Payment of the contributions must be made together with the monthly remittance of normal employees and employer’s contributions and must be identified separately on the appropriate Form. Additional Regular Contributions (ARC’s) From the 1st April 2008 members can elect to buy up to £5,000 of additional pension (in multiples of £250) by paying additional regular contributions. They have the choice of whether to purchase additional pension just for themselves only or to provide a pension with an inbuilt prospective surviving partner’s pension. Contributions can commence from the payment period following receipt of the members request and completed certificate of good health, until a date specified by the member. The contract period must be in whole years, the minimum repayment period being 1 year and the maximum being to age 65. Members do have to arrange (at their own expense) for their GP to complete a certificate of good health in order to proceed with the purchase ARC’s. Where a member makes a written election to this office to purchase ARC’s, we will write to the Employer to confirm the date on which the deductions are due to commence, the date they are due to cease and to the amount to be deducted. Each Employing Authority must have available a system whereby the appropriate set deductions (not percentage of pay as with added years) can be made directly from the employee, giving tax relief at source. Payment of the contributions must be made together with the monthly remittance of normal employees and employer’s contributions and must be identified separately on the appropriate Form. There is a facility (Regulation 13 of the LGPS (Benefits, Membership & Contributions) Regs 2007) whereby Employers can resolve to grant additional pension to an active member, to become payable from the same date as his pension becomes payable under any of the provisions of the Regulations. The maximum that can be awarded is an additional £5,000 per annum (as per Employee purchased ARC’s) but is does not have to be in multiples of £250. Any pension granted is to provide a pension for the member only. If an Employer wishes to do this for a member, then they must have a written policy statement regarding this Regulation and you should contact this office for a quotation as to the cost, which would be payable as a one off lump sum payment. You should note that additional pension can be paid in addition to any increase of total membership (Augmentation) resolved to be made under Regulation 12 of the LGPS (Benefits, Membership & Contributions) Regs 2007.

9. ADDITIONAL REGULAR CONTRIBUTIONS (ARC’S), ADDED YEARS AND ADDITIONAL VOLUNTARY CONTRIBUTION (A.V.C.) CONTRACTS


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PAYMENTS IN RESPECT OF ADDED YEARS AND ARC’S DO NOT ATTRACT EMPLOYERS CONTRIBUTIONS. General Notes regarding payment of Additional Contributions under the LGPS Regulations Cessation of an ARC contract is allowed at any time. If a member wishes to cancel a contract, then they are required to notify the pension’s office in writing to this effect. If you do receive written instructions direct from a member, then you must forward this to the pension’s office, once received we will then issue instructions to you to cease deductions. You must not cease deductions without receiving written instructions to this effect from the Pensions Office. Under no circumstances should you cease the deductions from a verbal request from the member. Additional Voluntary Contribution (A.V.C.) This is a method by which members are able to "top up" benefits by payment of an additional contribution to an insurance company who will invest and purchase the member an annuity (annual pension). The final benefits obviously depend upon investment performance and the annuity purchasing tables in force at the date of retirement. There are also a number of possible options within the LGPS that the member may have with regards to the AVC pot, details as follows: Annuity Upon leaving the Local Government Pension Scheme (LGPS), with immediate payment of pension benefits, a member can use part or the entire accumulated fund to buy a top-up pension from the LGPS. A top-up pension from the LGPS will provide an inflation-proofed pension, dependants’ benefits and a 5 year pension guarantee. Service Credit As a further alternative, in some circumstances, the AVC ‘pot’ can be transferred into the LGPS to purchase extra membership in the main scheme provided the payment of AVCs commenced prior to 13.11.01 and the AVC contributions ceased prior to retirement. Tax Free Lump Sum At retirement, a member may be able to take up to 100% of the accumulated fund as a tax-free lump sum if they draw it at the same time as their LGPS pension benefits, provided when added to the LGPS lump sum it does not exceed 25% of the overall value of the members LGPS benefits (including your AVC fund) or, if less, 25% of the lifetime allowance less an adjustment for the value of any other pension benefits the member may already drawing. Who is the AVC provider for the Gloucestershire County Pension Fund? In the case of the Gloucestershire County Council Pension Fund, the "In-House" A.V.C. Provider is Prudential Assurance Company Ltd. and as such all bodies who are members of the fund must have available a system whereby separately identified deductions can be made directly from the employee, giving tax relief at source. Please refer to the “Prudential Employer’s Manual” for the administrative arrangements. Please note that an employee must be a member of the LGPS in order to AVC’s to Prudential. General Notes regarding AVC’s It is a requirement of the Pensions Act 1995 that any contribution deducted from an employee must be paid to the AVC provider WITHIN 19 DAYS of the end of the calendar month in which those contributions have been deducted.


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An employee wishing to pay A.V.C.'s, does not have to use the "In-house" facility provided, i.e. Prudential Assurance Company Ltd, but may go to any financial company of their choosing. However, any contributions that they may wish to contribute to this "Free-standing" provider are to be arranged by them and MUST NOT be deducted from their salary. Just so you are aware members do not have any options within the LGPS, as they would if they paid into the In-House AVC facility.


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Statements of Policy The Local Government Pension Scheme Regulations 2008 contain significant discretions for both Administering Authorities and Employing Authorities. Each Employing Authority must prepare a written statement of its policy in relation to the exercise of its functions under the following Regulations: i) Reg. 12 – augmentation of Scheme membership for an active member ii) Reg. 13 – award of additional pension to an active member iii) Reg. 18 – flexible retirement iv) Reg. 30 – early payment of pension benefits at the request of a member v) Reg 30A – choice of payment of pension: pensioner member with deferred

benefits In order to assist employers in producing their statement of policy we have prepared a Template Policy document. Regulation 30A is a new discretion, which was introduced with effect from the 1st October 2012; the decision for this discretion is an addendum to the main policy statement document. Also contained in the template document are a number of Regulations on which we would wel

Employers Administration Guide 2008 - Gloucestershire...Please contact either Paula Marshall or...

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Transcript of Employers Administration Guide 2008 - Gloucestershire...Please contact either Paula Marshall or...